Income Determination in Open Inflation

Monetary and Fiscal Interactions: Short‐run and Long‐run Implications

“…3 3 See Isaac (1991) for an overview of the conflicting‐claims theoretical framework. Holzman (1950) offers an early theoretical exposition, and Desai (1973) and Rowthorn (1977) offer the classic theoretical implementations. In many settings, a constant desired profit share implies a constant desired mark‐up over unit costs (Weintraub, 1959; Harris, 1978; Naish, 1990).…”

The conceptual evolution of inflation inertia in Brazil

“…Koopmans (1942), Smithies (1942), Turvey (1949Turvey ( , 1951 and Holzman (1950) are among the constructs that use "period analysis" represented by systems of differential and difference equations, revealing lagged adjustments of variables (especially in wages) and their impact on inflation dynamics. Behavioral assumptions and institutions are embedded in specific parameters within a dynamic system of difference equations.…”

“…Beyond having provided interesting insights into the underlying dynamics of price rises, both Duesenberry's (1950) and Holzman's (1950) models are illustrative of the type of mathematical models in emergence in this period. The implications of this ascending mechanical view of inflation were twofold, to say the least: first, it reinforced and crystalized the profession's wide acceptance of the non-zero inflation definition of price stability and, second, it spawned a new research program in macroeconomics, for both theory and empirics.…”

“…86 Holzman 85 Rather, it seems more reasonable to assume this contribution to have been simply overshadowed by Duesenberry's income theory of consumption behavior, as we have already seen in previous sections. 86 Holzman's (1950) take is much in line with the methodological zeitgeist of those times: "This paper will concentrate on the wage-profit-price spiral as an example of the inflationary pressures generated by changes in separates an inflationary shock from reactions of the economy to the shocks. Inflationary shock is here defined as a relative price disturbance that increases some prices -or costsmore than others and, hence, has distributive effects over real income.…”

“…At about the same time, Franklyn Holzman (1950) is responsible for the most elaborate mathematical model of inflation dynamics in the early 1950s. He works out a model to convey the phenomenon of "wage-profit-price spiral" (p. 150), on the basis of the "redistribution-of-income effect in the determination of prices and money income under inflationary conditions.…”